Belgian finance minister Vincent Van Peteghem has said that developing an ‘Industrial Deal’ will be one of the key priorities of his country’s EU Council presidency, adding that “cutting red tape” and improving the bloc’s general investment climate are key to arresting the bloc’s industrial decline.
Van Peteghem’s comments follow Belgian Prime minister Alexander De Croo’s remarks to the European Parliament last week, during which he called for an Industrial Deal “to keep industrial production here in Europe” and stressed the need for “carrots” rather than “sticks” to incentivise investment.
Belgium assumed the six-month rotating Council presidency earlier this month, a period during which the European elections will take place, giving the country a chance to shape the bloc’s next five years’ priorities.
The finance minister’s remarks also come amid falling industrial output across the EU. Year-on-year industrial production fell by 5.8% in the EU in November last year after dropping by 5.4% in October.
“We should try to avoid this [downward] evolution of course,” Van Peteghem said during an event hosted by Bloomberg on Tuesday (23 January), in response to a question by Euractiv.
Echoing De Croo’s own choice of words, Van Peteghem added that the European Green Deal – the EU’s flagship environmental initiative approved in 2021 – has thus far “put a lot of focus on the stick and not enough maybe on the carrot, [and] that gave us a disadvantage compared to other continents”.
He also noted the Inflation Reduction Act (IRA) – one of US president Joe Biden’s flagship legislative achievements which provides $369 billion in subsidies to stimulate green investment and consumption – was superior to current European industrial initiatives by virtue of the relative paucity of its regulations.
“If you compare indeed the United States and the IRA to other continents you feel that red tape is not there, and that it goes much faster and much easier,’ he said. “That is not something that we will be able to deal with overnight [but] it is something we will need to focus on in the coming years.”
‘Hard to compete with’
Philipp Lausberg, an analyst at the European Policy Centre (EPC), said that he “agreed completely” with Belgium’s call for a European Industrial Deal, arguing that any proposal to re-industrialise the bloc’s economy must be implemented at the European level.
“Look at China and the US: the amount of massive resource mobilisation that’s going on there, the billions that are being channelled into green industries, into innovative new technologies and so on,” he said. “This is something that is hard to compete with if you don’t do something similar, and Europe should do the same. And if you want to do that effectively, you need to do it at the European level.”
Lausberg also agreed with Van Peteghem’s assessment that an overabundance of regulations is currently restricting the EU’s economic potential and exacerbating the industrial malaise.
“This is one of the top issues that companies are complaining about, one of the top problems that limit European competitiveness,” he said.
A controversial proposal
During the event, Van Peteghem also called for the EU to strengthen the EU’s Capital Markets Union and improve the financial literacy of ordinary citizens. He also stressed the need for “mobilis[ing] the full potential of the private sector” to finance the green and digital transition.
Van Peteghem strongly defended the goal to overhaul the bloc’s current fiscal rules, final negotiations for which kicked off last week.
“Going back to the old rules is not an option,” he said. “We need to deliver. Governments and financial markets need predictability and clarity, and this is also important for our own European credibility to come to a compromise and a decision.”
Such a view arguably puts the Belgium-led Council on a direct collision course with trade unions, who argue that the proposed rules would render it even more difficult for the EU to protect and grow its industrial capacity.
Judith Kirton-Darling, the acting joint general secretary of industriALL Europe, which represents some seven million European workers, told Euractiv last week that the bloc’s new rules would “hamper industrial development, potentially undermining Europe’s competitive position in the global market”.
She instead called upon the bloc to introduce more “flexible” fiscal regulations to encourage industrial investment and production.
The EPC’s Lausberg, however, disagreed with Kirton-Darling’s assessment. He argued that the new rules in fact “allow for more room for investment” compared to the previous regulations.
Lausberg warned against more industrial subsidies at national level as a “threat to the coherence of the single market”, which the fiscal rules could help prevent.
“If you want to do industrial policy properly, you need to invest a lot,” Lausberg said. “And if you do that on the national level, then you will have some countries being more capable of mustering billions of euros than others.”
“If you have member states investing independently, then you are losing the level playing field,” he added, instead calling for a coordinated approach at the EU level.
[Edited by Nathalie Weatherald]
